Gousto, one of the UK’s leading recipe box providers, today announces it is accelerating expansion plans in light of increased demand and structural changes within the UK grocery market. With total online sales in the UK up by 115% YoY, this shift to online is expected to be permanent, and in response, Gousto prepares to increase its customer fulfilment capacity more than threefold by 2022.
To meet this growth, Gousto has initiated an investment programme to step change its capacity including plans for multiple new fulfilment centres, where their recipe boxes are created and sent out for delivery. Increasing the workforce more than originally planned only a few months ago, and in addition to the hundreds of new roles already filled this year, Gousto will create an additional 1,000 jobs across the business by 2022.
Scaled and Profitable
Revenues for the first six months of 2020 have already surpassed the £83m of sales reported for the whole of 2019, which was itself a record year achieving annual growth of 67%. Trading in 2020 was strong from the start, with revenues for the first quarter ahead of expectations, with year-on-year growth of 70%.
This positive momentum exploded around the start of Q2 as customers bedded in for lockdown, with website traffic at peak times up to 10x normal levels. The focus in Q2 shifted in order to prioritise the increasing needs of loyal customers with average family size boxes up almost 30%.
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As part of its crisis response effort, Gousto engaged DEFRA (Department for Environment, Food and Rural Affairs) early on to work out where support was most needed. As a result, Gousto launched a temporary version of its service with reduced choice, enabling the business to deliver meals to more households in need of food. Gousto also stepped up its support for the Trussell Trust, foodbanks and homeless charity Shelter, providing the equivalent of some 6,000 meals.
Gousto has been profitable at the operating profit level since Q4 of 2019 and this trend has accelerated through 2020 as a result of top-line growth and the benefits of operational gearing coming through. The company now expects to report a significant, maiden profit in 2020, compared to an operating loss of £12.5m in 2019. Losses in 2019 reduced 20% as a result of an improved gross margin and the benefits of scale in both Distribution and Administrative costs as well as an 11% improvement in marketing efficiency. These positive trends accelerated in 2020 and underpin the business’ long term future as a profitable, cash generative business.
Investing for Further Rapid Growth
Thanks to a combination of new hires and harnessing its technology driven platform, Gousto has met a doubling of demand since the beginning of the year, from its fulfilment centre in Spalding, Lincolnshire, delivering five million meals per month in June (2.5 million in January 2020).
The second automated plant will open before the end of the year, with plans for two future centres already in the pipeline. All new fulfilment centres will be powered by Gousto’s proprietary algorithms which maximise speed of pick, daily volumes and pick accuracy, whilst minimising cost. This enables Gousto to offer the greatest choice of any recipe box provider, with over 55 recipes changing weekly, from the Joe Wicks Lean in 15 range and family classics to an expanding range of meat-free and plant-based options.
AI forecasting helps the business operate at almost 0% food waste by predicting order quantities, meaning no surplus food is ordered in. Gousto will continue to harness its technology to further propel its market-leading proposition, including Next Day Delivery and meal customisation, which will be the first of its kind in the industry.
Commenting Timo Boldt, CEO and Founder of Gousto said:
“The UK recipe box market has come of age with the recent lockdown accelerating structural trends which were already firmly underway. We have maintained record sales, even with the progressive easing of lockdown restrictions and view this shift as part of a wider permanent redrawing of the grocery landscape.
Overnight our market has opened up to a far larger audience, with new customers won over by the variety of meals, convenience of fresh ingredients delivered directly to your door and the ease of creating a delicious home-cooked dinner.
With a hugely dedicated and incredible team of people, Gousto is best placed to capitalise on this market growth, given our unrivalled technology, scale and market leading customer proposition, underpinned by access to both external capital and our positive cashflow.
We will continue to invest across the business, creating 1,000 new jobs to at least triple capacity by 2022, in response to demand and continuously improving the customer proposition, as we strive to become the UK’s most loved way to eat dinner.”